I'm just getting started, and hit the wall with this issue, as well. The problem turned out to be that the paths within the file were relative instead of absolute.
For example, if I have my music folders set up as follows
C:\
The playlists are being stored in the Media folder.
A relative path is \Music\Artist\Album\Track.mp3 (it's "relative" to the location where the playlist is stored).
The absolute path is C:\Media\Media\Music\Artist\Album\Track.mp3
Once I converted all the paths to absolute paths, I no longer had an issue with the import.
You can edit the playlist. I used NoteTab Light, a more advanced text editor than NotePad.